What is the Value of Owning a Timeshare?

So often I hear from my colleagues in the hospitality industry, what is the value proposition in owning a timeshare. The question is raised on both sides of the coin. What is the value in it for the timeshare owner and what is the value in it for the developer and/or manager of a timeshare resort.

At face value it is fairly easy to understand the value proposition in terms of the developer. Most often, timeshare developers are originally resort/hotel developers or condo developers. When looking into whether the concept would be a good alternative for their real estate, or a good compliment to mix into their current resorts they analyze some very compelling numbers (viz. depending on the resort market and its prices: 52 weeks x $20,000 = $1,040,000 per resort unit or condo).

On the individual timeshare owner’s side the review of benefits is not so clear cut. It is brimming with words like lifestyle, happiness, togetherness, rest and relaxation. The role of the management company is to bridge the gap between the developer zeal for a healthy financial portfolio and the timeshare owner’s longing for memorable vacations.

As a background, the timeshare product has many configurations. The product can be intervals (weeks), points, pre-sale of room nights, vacation/travel club, etc. It can be based upon a single site or multiple sites through both internal options (a club with multiple resorts) or through the affiliation with the exchange companies (RCI, Interval International or a few others). In the past, and especially in the US, the products were more real estate based (fee simple) and the ownership was until perpetuity. Now many products are “right to use” and have a specific number of years of use (e.g., 30 years, which is now being re-evaluated to shorter use periods).

No matter what the timeshare use plan, the question of keeping an owner engaged is all important to their happiness. That nebulous term of happiness equates into use of the product and that use translates into an owner keeping his/her loan payments and maintenance fees current.

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Human Resources: Value Creation

Businesses must evolve to stay competitive and this is also true of employment positions within those organizations. In the hotel industry, for example, the role that HR professionals perform continues to broaden and expand. Today, they are generally responsible for five key areas - government compliance; payroll and benefits; employee acquisition and retention; training and development; and organizational structure and culture. In this enlarged capacity, HR professionals are no longer seen as part of an administrative cost center, but rather as a member of the leadership team that creates strategic value within their organization. HR professionals help to define company policies and plans; enact and enforce systems of accountability; and utilize definable metrics to measure and justify outcomes. Of course, there are always new issues for HR professionals to address. Though seemingly safe for the moment, will the Affordable Care Act ultimately be repealed and replaced and, if so, what will the ramifications be? There are issues pertaining to Millennials in the workforce and women in leadership roles, as well as determining the appropriate use of social media within the organization. There are new onboarding processes and e-learning training platforms to evaluate, in addition to keeping abreast of political issues like the minimum wage hike movement, or the re-evaluation of overtime rules. Finally, there are genuine immigration and deportation issues that affect HR professionals, especially if they are located in Dreamer Cities, or employ a workforce that could be adversely impacted by federal government policies. The March Hotel Business Review will take a look at some of the issues, strategies and techniques that HR professionals are employing to create and sustain value in their organization.